Law: Income Tax Act, 1961

Section: 256

(a) Income tax---Capital or revenue expenditure Cinema theatres built by asses¬see Expenditure for providing carpets and screens in theatres ¬Carpets and screens, not part of capital assets Expenditure was revenue in nature. Where an assessee carrying on business of manufacture and sale of metal sheets and circles built up cinema theatres which were inaugurated on 23rd May, 1970 and 5th July, 1970 and for the assessment year 1971 72 the assessee claimed deduction of 50% of the expenditure incurred in providing carpets and screens in theatres for decoration so as to attract more crowd and thus more income, the provisions so made being not part of the theatres could not become part of capital assets. There was no difference between original provision of carpets and screens and their replace¬ments. Hence, the expenditure so incurred was revenue in nature and the assessee's claim for deduction must be allowed as the provision of carpets and screens was only to facilitate the assessee in running the theatres more profitably. (b) Income tax --- Depreciation Assessee running cinema theatres Cost of partition work and false ceiling in cinema buildings Claim for depreciation Partition work and false ceiling, not part of buildings¬. They fall under expression "fittings" Rate of allowance must be at 15% and not 7½ %. 1980 T L R 1092: 124 I T R 1 : AIR 1980 S C 1946; (1969) 72 I T R 306: (1969) 2 I T J 660 (Delhi); A I R 1955 S C 89 : 27 I T R 34 and A I R 1947 Bom. 445 : 15 ITR 105 ref. JUDGMENT G. RAMANUJAM, J. This assessee is a firm of 9 partners carrying on the business of manufacture and sale of brass sheets, circles and stainless steel-sheets and circles under the trade name "Kumbum". It has put up a building in Mount Road, Madras, known as "T. N. K. House" in which are built four cinema theatres viz. Devi, Devi Paradise, Devi Kala and Devi Bala. Besides the said four theatres, there are other portions let out to certain offices. The assessee originally filed a return for the assessment year 1971 72 on 8th October, 1972 claiming a business loss of Rs. 5,01,998. Subsequently, on 11th March, 1974 it filed a revised return claiming a business loss of Rs: 5,14,190. In…

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